Policy Study 411 April 2013 Air Traffic Control from Anywhere to Anywhere: The Case for ATC Facility Consolidation By Michael Harrison, Ira Gershkoff and Gary Church Project Director: Robert W. Poole, Jr., Searle Freedom Trust Transportation Fellow Reason Foundation Reason Foundation’s mission is to advance a free society by developing, applying and promoting libertarian principles, including individual liberty, free markets and the rule of law. We use journalism and public policy research to influence the frameworks and actions of policymakers, journalists and opinion leaders. Reason Foundation’s nonpartisan public policy research promotes choice, competition and a dynamic market economy as the foundation for human dignity and progress. Reason produces rigorous, peer-reviewed research and directly engages the policy process, seeking strategies that emphasize cooperation, flexibility, local knowledge and results. 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Poole, Jr. Executive Summary Air traffic control—in the United States, Europe and other advanced countries—is on the verge of a paradigm shift that promises to at least double the capacity of the skies without expanding the workforce, i.e. doubling productivity. The NextGen program in the United States is implementing key technology and procedural building blocks for this transition, but the program is at risk of becoming merely an upgrade of hardware and software, rather than redesigning the airspace and consolidating its far-flung, labor-intensive facilities. Without these additional changes, the end result will be a far more costly, albeit higher-tech, system. Three key enablers of the paradigm shift are performance-based navigation, far more precise surveillance of aircraft positions, and digital communications instead of voice. Together, these will make it possible to manage air traffic from anywhere to anywhere. A controller located in Miami will be able to manage traffic in Seattle, for example. Thanks to these changes, the entire airspace can be reconfigured, expanding its capacity to handle two or three times as many aircraft safely. This reconfigured airspace, in turn, should drive the reconfiguration of staffed facilities. ATC facilities will no longer need to be located directly beneath the airspace they manage. And that means most of the 187 Centers and TRACONs, many of which are aging and in need of major refurbishment if kept in service, can and should be shut down. They can be replaced by a much smaller number of facilities, many of which can be designed from the outset to function in the from-anywhere-to-anywhere paradigm. This study presents an original plan for consolidation of airspace and ATC facilities in the continental United States. Under this plan, the current 20 en-route Centers and 167 TRACONs would be consolidated into five high-altitude Centers, eight Integrated Control Facilities, and 38 consolidated TRACONs. ATC facilities, such as Centers and TRACONS, have significant economies of scale, as demonstrated by the much higher productivity of the larger existing facilities. Current productivity data are used in this study to estimate the operating cost savings that would be obtained via the proposed consolidation. In the U.S., annual savings simply from economies of scale would be $314 million. Combined with further productivity gains from NextGen technology and procedure changes, total operating cost savings from the reconfigured system range from $540 million to $680 million per year. There would also be annual savings in equipment and facility maintenance estimated at $109 million per year. Total operating cost savings will thus be in the vicinity of a billion dollars a year. While it was beyond the scope of this study to estimate the cost of the consolidated facilities, the study did estimate the savings from closing and disposing of obsolete Centers and TRACONs. This one-time saving, at $1.7 billion, should be applied toward the cost of developing the new, consolidated facilities (which would require a legislative change). At this point, the FAA has not developed cost estimates for an integrated plan for consolidation. Any new facility costs are speculative without a detailed, time-sequenced consolidation plan. To summarize, the overall saving from consolidating facilities (as well as ATC ground equipment that is no longer needed as NextGen is implemented) is estimated in this study to be the following: One-Time Consolidation Savings Centers and TRACONs closed $689 million ATC equipment and structures retired 654 million Salvaged equipment value 294 million Avoided facility refurbishment costs 98 million Total one-time savings: $1,735 million Annual Consolidation Savings Productivity gains from economies of scale $314 million Next-Gen productivity increases 540–680 million Facility and equipment maintenance savings 109 million Total annual savings: $963–1,103 million The FAA’s current approach to facility consolidation is problematic. Its original 2010 concept, the Future Facilities Program, called for large-scale consolidation including the creation of Integrated Control Facilities. However, since then the agency has failed to produce a detailed plan outlining a schedule for closing obsolete facilities and opening new ones, despite being called upon by Congress to do so. Instead, it is focusing all its attention on developing an initial ICF in the most technically and politically difficult portion of the airspace: the New York/New Jersey area. And like several previous proposals for large-scale facility consolidation, the proposed Liberty ICF has already encountered significant congressional intervention. This study calls for rethinking the current approach to NextGen and the consolidation of airspace and facilities. The FAA’s Air Traffic Organization should develop a nationwide airspace reconfiguration plan and develop a facility consolidation plan consistent with that. The latter would identify the facilities to be closed, the new and consolidated facilities to replace them, and an overall schedule for what happens when. Labor agreements must be worked out in advance of consolidation, to ensure that the productivity gains inherent in consolidation will actually be realized. Congress should develop a process to permit large-scale consolidation to proceed without micro- management, as it has done for needed but difficult military base closing and consolidation. It needs to allow the Air Traffic Organization to make use of new funding options, such as issuing revenue bonds, to finance the facility consolidation program. And it needs to permit the ATO to retain the proceeds from selling the land and buildings associated with facilities that will be closed, to help fund the development of the new facilities. If Congress cannot accomplish those admittedly difficult tasks in the near future, the alternative is to delegate these responsibilities to a revamped ATO that would be insulated from both congressional micro-management and federal budget constraints. This would involve separating the ATO from the FAA, enabling it to charge aircraft operators for its services (like airports and other utilities) and use the revenue stream to back ATO revenue bonds. The FAA would regulate the reformed ATO for safety, at arm’s length. This model has been used successfully overseas, including in Australia, Canada, Germany and the U.K., each of whose self-supporting air navigation service providers has successfully consolidated its equivalent of Centers and TRACONs along the lines proposed in this study. Without consolidating airspace and ATC facilities, NextGen is at risk of becoming merely a very costly upgrade of hardware and software, without the large productivity gains that should constitute a major portion of the business case for this transition. And without a timely commitment to large-scale facility consolidation, the Air Traffic Organization will be forced to spend billions in coming decades refurbishing and rehabilitating aging and unneeded facilities. Consequently, the time for action on these issues is now. Reason Foundation Table of Contents Introduction .............................................................................................................. 1 Workload Considerations ......................................................................................... 5 Facility Age and Funding ......................................................................................... 11 An Integrated Approach to Consolidation .............................................................. 15 Geographic TRACON Consolidation ..................................................................................... 15 Interim ICFs .........................................................................................................................